U.S. Opening Bell: Investors Flip-Flop On Risk; Stocks Climb; Oil Advances

Key Events

Technology shares in China rallied strongly on Tuesday as risk investors returned to the market. The positive sentiment saw US futures on the Dow, S&P, NASDAQ and Russell 2000 benefit, all trading in the green ahead of the US session open. 

Gold and the dollar remain steady as investors await policy clues from the Federal Reserve's Jackson Hole symposium later in the week. 

Global Financial Affairs

NASDAQ 100 futures are outperforming, after the underlying benchmark notched another Wall Street record on Monday.

Europe's STOXX 600 Index climbed at the open with tech shares, but cyclical stocks also gained. Raw materials were boosted by the rally in the price of oil.

Even after last week’s selloff, European shares are nearing a record on the outlook that central banks will continue their unparalleled stimulus programs, after mixed economic data—European PMIs were strong but comments by Dallas FOMC member, Robert Kaplan on Friday implied that the current spread of COVID-19 cases in the US could lead the Fed to delay plans to start reducing its bond purchases. 

This week so far there has been a strong global rally as investors buy the dip caused by last week’s selloff. However, there has been no change in the the fundamentals and the coronavirus continues to disrupt the economic recovery with some countries extending social restrictions.

The rebound in China shares was also driven solely by the fact that last week's slide offered perceived value. There is no indication that recent regulations would be lifted. Despite this, Hong Kong’s Hang Seng Tech Index jumped over 7%.

Meanwhile, investors are eagerly anticipating news from Jackson Hole. The market narrative seems to be that Fed Chair Jerome Powell will reiterate caution, disappointing those who expected any scaling back of the Fed’s bond purchases.

Yields on the 10-year Treasury note were little changed, as Treasury investors sought direction.

Investors will have to decide whether they wish to continue selling bonds, allowing rates to climb with the green channel, creating a H&S bottom. Or would they prefer to resume hoarding Treasuries, pushing yields back down.

Trading on the dollar showed the same indecision.

The greenback fell away from the neckline of a massive double-bottom, as well as the top of a rising channel, though it found support at the bottom of a more recent rising channel.

Gold too, wasn’t sure which way to go as it struggled between conflicting technical forces.

The yellow metal completed a falling flag, but found resistance at the top of its falling channel.

Bitcoin climbed for the third day.

The cryptocurrency fell from the $50,000 level it achieved yesterday, forming a bearish shooting star, but it's trying to break through again today. However, while it trades within a rising channel, it could dip before rallying further.  

Crude oil rose past $66, extending yesterday’s more-than-5% jump.

Bulls are testing WTI's descending triangle, which makes up a top.

Up Ahead

• On Wednesday, crude oil inventories are reported.
• In the US GDP, initial jobless claims are published on Thursday.
• On Friday, July US personal income and spending data is reported.

Market Moves

Stocks

• The FTSE 100 fell 0.2%
• The STOXX 600 rose 0.2%
• Futures on the S&P 500 gained 0.3%
• Futures on the NASDAQ 100 climbed 0.5%
• The MSCI Asia Pacific Index rose 1.4%
• The MSCI Emerging Markets Index advanced 1.7%

Currencies

• The Dollar Index was little changed
• The British pound was little changed at $1.3717
• The euro was little changed at $1.1738
• The Japanese yen was little changed at 109.74 per dollar
• The offshore yuan was little changed at 6.4805 per dollar

Bonds

• Britain’s 10-year yield was little changed at 0.53%
• The yield on 10-year Treasuries was little changed at 1.26%
• Germany’s 10-year yield was little changed at -0.48%

Commodities

• Brent crude rose 0.7% to $69.26 a barrel
• Spot gold fell 0.2% to $1,802.08 an ounce